Having trouble differentiating...

[CrazyAce]

What is the difference between a company's book value and stockholder's equity?

The only thing that I can find that may explain it to me is that book value is essentially stockholder's equity minus intangible assets like "goodwill." If that's the case, then I need "goodwill" explained to me because it doesn't really make sense

Thanks

[CrazyAce]

I think I see where I may be confused. Book value and SH equity are the same, it's just that return on equity and % increase in book value are calculated differently.

Right?

[CrazyAce]

Also, say Berkshire Hathaway increased their stockholder's equity by $16.9 billion but their net income was like $11 billion.

What accounts for this difference?

[RedJoker]

book value is shareholder equity - preferred equity.

Goodwill is an accounting plug.

[hawk59]

As far as I know the terms are interchangeable, you can also say "tangible book value" which is book value minus any goodwill or intangible assets.

[DesertCat]

[ QUOTE ]
What is the difference between a company's book value and stockholder's equity?

The only thing that I can find that may explain it to me is that book value is essentially stockholder's equity minus intangible assets like "goodwill." If that's the case, then I need "goodwill" explained to me because it doesn't really make sense

Thanks

[/ QUOTE ]

I use them interchangably (since most companies don't have preferred stock), but in typical usage book value is assets minus liabilites per share, while shareholder equity is a total value of assets minus liabilites.

Goodwill is an asset created to account for the purchase of intangible assets. The typical example is when company A buys company B. A pays $100M but B only has a book value of $75M. A's balance sheet after the purchase will show the $75M in net assets they purchased, plus $25M in "goodwill" to account for the premium paid over book value. Essentially accounting is saying that company B has some intangible assets (brand, customer relationships, etc) that make it worth $25m more than it's book value.

[SlowHabit]

[ QUOTE ]
[ QUOTE ]
What is the difference between a company's book value and stockholder's equity?

The only thing that I can find that may explain it to me is that book value is essentially stockholder's equity minus intangible assets like "goodwill." If that's the case, then I need "goodwill" explained to me because it doesn't really make sense

Thanks

[/ QUOTE ]

I use them interchangably (since most companies don't have preferred stock), but in typical usage book value is assets minus liabilites per share, while shareholder equity is a total value of assets minus liabilites.


[/ QUOTE ]
What's the difference?

[DesertCat]

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[ QUOTE ]


[/ QUOTE ]

I use them interchangably (since most companies don't have preferred stock), but in typical usage book value is assets minus liabilites per share, while shareholder equity is a total value of assets minus liabilites.


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What's the difference?

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The "per share". A company with $25M in assets and $15M in liabilities has $10M in shareholder equity. If it has 1M shares of stock it has a book value of $10 per share. That at least is the popular usage.